The United
States politicians like insurance companies, so they let them handle medical
and crop insurance.
The result is
much higher administration costs in the United States than in Canada where
governments are the single source of medical and crop insurance.
For medical
services, administration accounts for one per cent of total costs in Canada and
for 20 per cent in the United States. I don’t know the figures for crop
insurance administration.
This explains
in part why Zurich Insurance Group AG agreed to buy a Wells Fargo & Co.
crop-insurance business for as much as $1.05 billion last week.
The purchase
or Rural Community Insurance Services, or RCIS, will give Zurich a 20 percent
share of the market.
It will
provide about $1.6 billion in net earned premiums by 2017, adding 3.5 percent
to Zurich’s top line, according to a market analyst.
Others who
expanded their crop insurance business recently are HCC, which bought Producers
Ag Insurance Group from CUNA Mutual Group and Farmers Mutual Hail Insurance Co.
of Iowa bought Deere & Co.’s crop insurance unit.
